Evergrande Kicks Default Can Down The Road

Spillover from Thursday's cautious risk tone moved onshore Asia EMFX in early trade, albeit headlines signalling that Evergrande paid a missed dollar bond interest provided some reprieve. That being said, participants were cognisant of the fact that the company has merely pulled back from the brink as further coupon payments loom large.

• CNH: Offshore yuan see-sawed in reaction to the Evergrande news. It appreciated in the initial reaction, only to shed those gains promptly thereafter. Evergrande's payment came just days ahead of Saturday's expiry of a grace period, after which a missed payment would force a formal default.
• KRW: USD/KRW moved higher, as relief provided by headlines surrounding China's embattled real-estate giant was brief and limited. South Korea confirmed plans to cut fuel tax and LNG tariff amid lingering inflation concerns, with details to be announced next week.
• IDR: The rupiah was the worst performer in Asia EM basket. It is the most risk-sensitive currency in the region alongside KRW. The government's decision to tighten air travel rules ahead of the year-end holiday season may have further undermined the IDR, even as the new curbs were modest by pandemic-era standards.
• MYR: The ringgit fluctuated around unchanged levels. Malaysia's CPI inflation accelerated a tad to +2.2% Y/Y in September from +2.0% recorded in August. It beat consensus estimate of +2.1% but was within the forecast range.
• PHP: The peso went offered, even as the Philippine Health Dept suggested that restrictions in Metro Manila could be eased "soon." Yesterday's comments from the BSP were digested, but truth be told, they provided little in the way of fresh insights.
• THB: Thai markets were closed in observance of a public holiday.